assume that a 6 percent $500,000 bond with semiannual interest payments and a re
ID: 2783426 • Letter: A
Question
assume that a 6 percent $500,000 bond with semiannual interest payments and a remaining life of 10 years could be purchased today, when market interest rates are 4.5 percent. How much would you have to buy the bond?assume that a 6 percent $500,000 bond with semiannual interest payments and a remaining life of 10 years could be purchased today, when market interest rates are 4.5 percent. How much would you have to buy the bond?
assume that a 6 percent $500,000 bond with semiannual interest payments and a remaining life of 10 years could be purchased today, when market interest rates are 4.5 percent. How much would you have to buy the bond?
assume that a 6 percent $500,000 bond with semiannual interest payments and a remaining life of 10 years could be purchased today, when market interest rates are 4.5 percent. How much would you have to buy the bond?
Explanation / Answer
How much would you have to buy the bond
=(500000*6%/2)*((1-(1+(4.5%/2))^(-10*2))/(4.5%/2))+500000/(1+(4.5%/2))^(10*2)
=559863.92
the above is the answer
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